ECAs are government-backed institutions that first entered into the financing of wind projects in a major way following the global financial crisis, which limited the amount of commercial bank debt on offer. They aid project financings by either providing direct loans or, more commonly, credit guarantees that essentially offer to pay a proportion of a bank loan should a project default on its repayments. In return, the project must use equipment exported from the same country as the ECA.

The lack of commercial bank debt still persists and, at the same time, the shrinking of traditional western European wind markets has forced manufacturers to look at emerging markets such as eastern Europe, as well as the riskier offshore wind sector.

With banks now highly risk averse, ECAs are being asked to increase their participation in wind financings in these new markets, Anna Marie Owie, chief underwriter at Danish export credit agency EKF, told delegates at the European Wind Energy Association (EWEA) conference in Vienna, Austria, last month.

"Our participation has increased and we see an increasing need for us," said Owie. EKF has financed wind-energy projects for more than 20 years, largely focusing on projects using Vestas or Siemens turbines. However, while wind once represented about 5% of EKF's corporate financing exposure, that percentage has increased to around 50%, she said. And, based on projects in the pipeline, this is destined to rise to as much as 80%.

Global outlook

"The pipeline is full for this year and it's global demand," Owie said. "There's offshore and there's lots going on in southern Europe and Latin America, while Asia is beginning to pick up as well."

Most recently EKF was one of a dozen institutions providing EUR 937 million in project financing for German developer WPD's 288MW Butendiek offshore wind farm. Onshore, one example of EKF's global spread is provided by Italy's Enel Green Power, which has signed financing deals with EKF for onshore projects using Danish turbine technology in the US, Romania, Brazil and Chile.

The presence of a strong manufacturing base in Germany helps explain why German ECA Euler Hermes Deutschland is also particularly active. Euler Hermes says wind energy projects covered with its export credit guarantees reached an all-time high in 2011; figures for 2012 are not yet out. This January, it issued export credit cover for the 50MW Zeytineli wind farm in Turkey, equipped with Nordex turbines, after providing cover for a 120MW wind farm in the country using Enercon machines. Another recent major deal involved support for a 100MW South African wind farm.

Growing risks

As onshore project pipelines spread out from western Europe, investment risks have also increased. "One of the reasons ECAs have become more active is that there is more going on in wind in central and eastern Europe and other emerging markets where project financing is not so easy to get," said Jerome Guillet, managing director of Green Giraffe Energy Partners.

"In offshore, an agency like EKF has the advantage of being able to provide fairly big project financing tickets, which means there can be fewer people around the table and it's easier to get deals done."

While northern European ECAs have been most active in promoting wind, Italian agency SACE has also helped facilitate a number of wind-energy financing deals. However, SACE has primarily supported wind projects in its home market, not in its initial role as an export credit agency but through its ability to provide credit guarantees for domestic investments. In February, SACE provided a guarantee on EUR 42.4 million project financing for a 38MW wind farm in the southern Italian region of Apulia. It also provided backing for Italy's largest wind farm, Italian wind energy developer and operator Falck Renewables' 138MW Budduso e Ala dei Sardi wind farm in Sardinia, which came into operation in 2011.

Meanwhile in Spain, turbine manufacturers are desperately seeking supply deals outside of their dire domestic market, but their financing options are far from clear.

"In Spain there is a combination of financing and risk coverage made available for exports through a number of mechanisms, but there is a lack of coordination," explains Alberto Cena, technical director at Spanish wind energy association AEE. "We are pushing for greater coordination and asking the economy ministry for support in exports."

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